3 Ways Invoice Factoring Helps Small Companies

Many people dream of the day when they can own a small business. In fact, statistics show that there are about 28 million small businesses located throughout the United States. Unfortunately, certain small businesses will be unable to successfully fund their companies. As this happens, more small businesses continue to go under. However, there is a simple way to create more funding for your business. Considering that, you’ll want to learn more about business invoice factoring. In this post, you’ll learn what business invoice factoring is and how it can help your company.

Understanding Business Invoice Factoring

One of the largest problems a small business faces is collecting invoices. Unfortunately, about 60% of invoices a company sends out aren’t paid on time. This is where business invoice factoring enters the picture. Almost every company has an accounts receivable department. This department does their part to help a company take care of unpaid invoices.

Invoice factoring is known as a type of accounts receivable financing solution. This solution enables a business to no longer worry about unpaid invoices. Invoice factoring companies turn these unpaid invoices in cash for your small company. Imagine that your company has collected $15,000 worth of unpaid invoices. After contacting an invoice factoring company, you’re able to receive 90% of these funds, or $13,500. Of course, there will be fees that this company must use in order to remain in business.

After terms are agreed upon, a business invoice factoring company works to collect these debts. In most cases, those owning money through invoices have a period of 90 days to take care of these matters. After the invoices are collected, your company receives any remaining funding.

How Invoice Factoring Helps Small Businesses

Now that you understand how this process works, it’s understandable to have additional concerns. Many small business owners are extremely smart individuals. Considering that, there’s nothing wrong with wanting to learn more about invoice factoring. Considering that, here are three important benefits of invoice factoring for small business owners.

  • Faster Cash for Your Business

    The main benefit of invoice factoring is improving company cash flow. In certain situations, cash flow is the main factor determining whether or not a small business stays afloat. Also, you’ll never know what emergency situations lie ahead for your company. Considering that, it’s helpful to have peace of mind knowing your small company continues to enjoy positive cash flow.
  • More Time to Focus on Other Matters

    Small business owners know their days are often busy. With that in mind, you might find yourself spread extremely thin. This makes it nearly impossible to find ways to grow your small company into a larger one. Fortunately, you won’t have to worry about this while working with invoice factoring companies. Having your unpaid debts taken care of allows you to focus on important small business owner matters.
  • Your Business Doesn’t Have to be a Fortune 500 Company

    Owners of small companies often have to deal with restrictions and regulations. Unfortunately, this can make you almost conditioned to believe that it’s hard for small businesses to gain acceptance. Therefore, it’s understandable to worry about meeting certain guidelines before partnering with invoice factoring services. Fortunately, business factoring companies work with businesses of all sizes. This means that your company doesn’t need perfect credit. In addition, your company doesn’t have to be in business for decades in order to qualify for invoice factoring. This is beneficial for small companies needing positive cash flow who haven’t been able to make a name for themselves.

To summarize, there are many benefits associated with small business invoice factoring. If each invoice generated throughout the United States was paid on time, small businesses would be able to collectively hire 2.1 million new workers. Unfortunately, this is rarely the case for any small business owner. Therefore, it’s wise to consider working with an invoice factoring company. These business factoring services allow small business owners to transform unpaid debts into positive cash flow.

Leave a Reply